GST Refund Claim u/s 54(3)(ii) r/w S. 56 Rejected: Calcutta HC says Not a Fit Case for Intervention [Read Order]

The Calcutta High Court held that the writ court cannot be invoked to challenge a refund rejection order passed during the pendency of a writ petition, considering when the assessee has an alternative statutory remedy under the Goods and Services Tax law. The Court ruled that the matter did not present circumstances warranting intervention and declined to set aside the impugned order.

Century Products, the appellant had approached the High Court seeking a direction upon the State tax authorities to process and disburse its refund claim for February 2025 amounting to ₹1,55,096. The refund comprised ₹77,548 under Central Goods and Services Tax and ₹77,548 under State Goods and Services Tax.

The refund was claimed under Section 54(3)(ii) read with Section 56 of the Central Goods and Services Tax Act, 2017 and the West Bengal Goods and Services TaxAct, 2017, as well as Rule 89 of the Central Goods and Services Tax Rules.

During the pendency of the writ petition, the authorities issued a show cause notice to Century Products. Subsequently, the adjudicating authority passed an order under Section 54 of the Central Goods and Services Tax Act, 2017/West Bengal Goods and Services Tax Act, 2017, rejecting the refund claim. Aggrieved, the appellant filed an application, assailing this order within the pending writ petition.

Represented by Sweta Mukherjee and Sakshi Bagaria, the appellant submitted that both the show cause notice and the refund rejection order suffered from jurisdictional errors and deserved to be quashed.

Accordingly, the authorities acted contrary to the statutory scheme under Section 54 of the Central Goods and Services Tax Act, 2017, warranting interference by the writ court even though the order was passed during the pendency of the writ proceedings.

Represented by Nilotpal Chatterjee, Tanoy Chakraborty, Saptak Sanyal, the respondents argued that the writ petition had been filed solely for the limited purpose of seeking expeditious disposal of the refund application. Since the refund application had already been adjudicated, they contended that the appellant could not challenge the resulting order through an application.

The respondents submitted that the impugned refund rejection order was appealable under Section 107 of the Central Goods and Services Tax Act, 2017, and therefore, the appellant must exhaust the statutory remedy instead of invoking the writ jurisdiction.

Justice Om Narayan Rai observed that although the writ court possesses the power to set aside orders passed during the pendency of a writ petition despite the existence of an alternative remedy, such power must be exercised sparingly. The Court ruled that this was not a fit case for intervention.

The Court found no jurisdictional error in the refund rejection order. It noted that Century Products had itself approached the proper authority for processing its refund claim, which established beyond doubt that the authority was competent not only to allow the refund but also to reject it. Therefore, the Court declined to set aside the order through an application filed within the writ proceedings.

Holding that the order was appealable under Section 107 of the Central Goods and Services Tax Act, 2017, the Court disposed of the writ petition and the application, leaving the appellant at liberty to challenge the order before the appellate authority.

The Court clarified that it had not gone into the merits of the refund claim and that the appellate authority must independently adjudicate the appeal, if filed.

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